SIC Code Lookup | A Comprehensive Guide for Compliance and Strategic Analysis

Standard Industrial Classification (SIC) codes are the numeric codes used to classify businesses by their primary industry. 

Initially, these codes were developed in 1973 in the United States and were assigned a four-digit number to every business. This was to create a standardized way of categorizing companies across government agencies.

For instance, a real estate company might have one SIC code, while a financial firm has another. The whole SIC system and its later expansion enable different companies to speak a “common language” regarding industries. 

In the late 1990s, the U.S. introduced NAICS(North American Industry Classification System), a six-digit code system replacing the SIC for multiple reasons. It was designed to provide more details and to align with international standards.

Are SIC and NAICS the Same?

The core idea of the system is the same as that of SIC and NAICS codes, which identify what a business does. The nuance between the two is that NAICS covers all the new industries that are not captured under SIC.  However, both are essential identifiers for a company’s line of business, and they affect everything from regulatory oversight to market analysis.

The Importance of Business SIC Codes 

Compliance and Regulatory Requirements 

SIC codes are the foundational tools for government agencies to monitor and regulate businesses. These codes assist in determining which laws, sanctions, and oversight programs to apply.  In the U.S., many businesses are regulated based on their SIC classifications. 

Thus, the regulators actively monitor industry codes to enforce the proper rules on the right business.

Benchmarking and Market Research 

Beyond compliance, SIC codes are invaluable for business intelligence as these codes classify companies into defined industries. They enable apple-to-apple comparisons among peers. A company can use its industry code to gather aggregated data on its sector. 

Moreover, using these standard codes, one can track how an industry grows or contracts over time, identify emerging market segments and study the competitive landscape.

Credit Risk Assessment and Financial Due Diligence 

Lenders and investors consider a company’s industry when assessing risk. Some industries are riskier than others. Therefore, banks check the SIC (Standard Industrial Classification Code) on loan applications to understand the business type. 

Even outside of loans, business partners or investors might hesitate if a company appears in a high-risk industrial category. These codes assist the financial institutions in comparing a company’s risk to industry standards. 

Vendor and Supplier Verification

In business-to-business dealings, companies often perform due diligence on their vendors and business entities for compliance and risk management.  SIC code serves as a quick way to verify the nature of a third-party company’s business. In most cases, it is essential for the “Know Your Business (KYB)” procedure while onboarding any entity. 

In terms of verification, companies use the KYB solutions that leverage SIC codes to retrieve important details about a business. It confirms that the business is legitimate and provides transparency into its operations.

SIC Codes in Due Diligence Process 

SIC codes are pivotal in various due diligence scenarios, helping professionals quickly comprehend a company’s profile and identify potential risks. One of the use cases includes background checks in KYB procedures on companies. 

When screening a potential partner or customer business, a bank or enterprise often uses the SIC code to run background screenings against databases of restricted industries or watchlists. 

For example, certain industries might be at high risk for money laundering or subject to sanctions; a quick glance at a company’s code can tell a compliance officer if enhanced checks are needed. If the code indicates “financial services,” the company may need to show anti-money laundering controls. 

KYB processes used by banks explicitly incorporate industry classification to evaluate a business customer’s risk level​. The codes act as a checklist for areas to investigate compliance, licensing, etc., as applicable to those industries.

Methods for SIC Code Lookup

Finding the accurate SIC code for a business can be done through several approaches. It includes all the public and private databases and third-party services. 

Manual Vs. Automated SIC Code Lookup Methods 

Manually determining a code might involve reviewing the official code definitions in SIC manuals and deciding which best fits the business.  Manual lookup is feasible for a single business, but it can be time-consuming and requires some judgment to interpret descriptions. 

On the contrary, automated methods are increasingly popular, especially when classifying many companies or integrating them into workflows. Some service providers offer API solutions that automatically assign an industry code based on a company’s name and description. 

These tools use algorithms to scan multiple data sources and match the business to the closest classification. For instance, a fintech company might use an automated KYB platform that outputs the SIC code for each new merchant it signs up, rather than having an analyst research each one.

Information Required for Business SIC Lookup 

In order to look up a company’s SIC code, some of the primary information required includes:

• Name
• Registration number
• Contact details
• Postal code 
• Website URL
• Data Universal Numbering System(DUNS) number

Regulatory and Regional Considerations for SIC System

Regulatory use of SIC codes varies by jurisdiction, but some common patterns emerge in the US, UK, and internationally.

United States

• Several U.S. agencies explicitly reference these codes. The SEC, for instance, still uses SIC codes to classify companies under its oversight.​
• Public companies must declare their primary SIC code in filings.
• The Federal Trade Commission (FTC) does not mandate companies to report SIC codes in the same way the SEC or IRS do, but it does use industry classifications in its mission areas.

Overall, in the U.S., knowing your SIC/NAICS code is important not just for compliance with one agency but across multiple federal touchpoints – from securities law to tax to trade and labor statistics.

United Kingdom

• SIC codes are integral to corporate compliance and reporting in the UK.
• Companies House (the UK registrar) requires every company to provide a SIC code when filing its annual confirmation statement (previously the annual return)​
• The UK uses an SIC system last updated in 2007, and Companies House provides an official condensed list of acceptable codes to choose from​ the website.
• The UK system allows companies to list multiple SIC codes if they engage in diverse activities, but one must be marked as primary. 

In summary, UK compliance requires attentiveness to SIC codes in official filings, and both tax authorities and other agencies reference those codes in executing their duties.

EU and International SIC 

Across the European Union, the NACE code system is the standard for classifying economic activities. NACE codes are very similar in concept to the SIC system and are used by EU statistical agencies and regulators. 

EU companies must report NACE codes for national registries and sanctions. The classification codes influence export controls and permits. Moreover, a proper classification is essential for global compliance management. 

Best Practices for Business SIC Code Lookup

Given the wide-ranging implications of SIC codes, it is essential for businesses to manage the industry classification proactively. Here are some best practices for compliance officers and business owners to consider:

• Ensure accurate classification from the start 
• Use official and updated sources 
• Search by keywords and business descriptions 
• Cross-verify with NAICS codes
• Verify the code’s relevance to the industry 
• Stay aligned with regulatory requirements

Streamline Your SIC Code Lookup Process with The KYB Solutions

Are you a business entity striving to unlock the full potential of any company? When a company name doesn’t clearly reveal its industry domain, this is where the SIC code proves invaluable. The KYB platform transforms the tedious process of SIC code lookup into an easy and streamlined procedure. 

With The KYB updated system, business entities can access original, accurate, and trusted data in real time. No more grappling with unreliable sources or manually searching, the modern solution streamlines your operations and strengthens your decision-making power. Elevate your efficiency, minimize risk, and stay ahead of the competition by trusting The KYB solutions.

Frequently Asked Questions

What is a SIC Code?

The standard industrial classification system, or SIC code, is a numerical scheme assigned to businesses based on their industry type. It groups similar companies under the same code.

What is a SIC Code for Business?

SIC, a classification system created in the late 1930s in the U.S., uses four-digit codes to identify a business’s primary industry, determined by its highest revenue category.